Friday, February 10, 2012

5 Reasons to Sell Your Business

There are some positive signs that the economy is improving and beginning to turn around.  At the same time, however, there are those that believe we are destined to repeat 2008.   This future uncertainty is precisely why a lot of business owners are looking to get out.   If you’ve been thinking of selling your business, here are five reasons to get out now:

1. You’ve had enough:  A lot of business owners took a major set back in 2008/2009.   If your business has since stabilized and the prospect of fighting through another recession leaves you panic-stricken, it’s time to get out.

2. The worst is behind you:  Were you getting ready to sell back in 2007?  Then 2008 hit, and 2009 was your worst financial year in recent memory.   You cut everything you could in 2010, showed a profit in 2011 and now you’re starting to see some profit and revenue growth.   The best time to sell is on an upswing with the expectation of continued growth.   With your numbers going in the right direction, now might be just the right time to get out.

3. The demographics are not on your side:  As the Baby Boomers start to retire, there will be an oversupply of businesses for sale on the market.   This will create a buyer’s market which will put downward pressure on prices.  You may want to get out ahead of the flood.

4. The closing window:  It’s been tough for private equity companies to raise money since 2008. Many firms had their last successful round of fund raising in 2007 and many of these funds have a five-year window in which to invest.   Some private equity firms will make investments in companies that have at least $1 million in pre-tax profits.  If this includes your business, you could get a bidding war going among private equity buyers keen to invest their money before they have to give it back.

5. Nobody is lucky forever:  If you’re lucky enough to be in a business that actually benefits from a bad economy, that's great news. You’ve probably just had the best three years of your business life. But no cycle lasts forever and right now may be a great time to get out of the game.

If you feel like a gambler at a blackjack table with everything riding on the outcome of one hand, it may be the right time to take a few chips off the table.

Do you have a sellable business?  The Sellability Score is a quantitative tool designed to analyze how sellable your business is.   After completing this short questionnaire, you will immediately receive a Sellability Score out of 100 along with instructions for interpreting your results. Take the test here:

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